6.4.2 Markets for Usufruct Rights
The market for usufruct rights - called tenancy rights in most countries - is very imperfect. In agricultural countries, especially, as a result of the many people wanting to rent and the few ones who own the land which they want to rent out, the market is to a large extent one-sided. It is not so much a 'market' but rather a distribution of land rights by the owner to people to whom he gives preference. As the price is usually SO % of the output according to custom, the decision concerning the selection of the tenant concentrates on such factors as family or other relation to the tenant, his loyalty, history of honesty and hard work, etc. In many cases, lease contracts are renewed annually, often for a lifetime, as long as the tenant 'behaves well.'
However, there is a slow but steady trend towards cash rent. Since the landlord can no longer reduce the number of his tenants as much as in former times, cash rent represents a guarantee and, in the long run, perhaps a higher income than share rent without strict supervision.
This is partly a consequence of the gradually changing type of lessees. While in former times the large landlords rented their land to small tenants, the small owner is becoming more and more the typical lessor. Inheritance has reduced the amount of land owned by one man, and many largeholders have opted for self-cultivation, especially with the change of generation. Besides, smallholders are increasingly leasing their land or part of it. It may be that they feel incapable of meeting the requirements of a technologically advanced agriculture or that the family engages in multiemployment and limits its agricultural interest to self-sufficiency. They are interested in earning a fixed steady income which they obtain by renting their land for cash. The change in the type of lessor has consequences for the relations between lessor and tenant. The lessor is no longer the more or less exploiting landlord, but a smallholder who has almost the same status than the tenant himself. This change has a greater impact than many fruitless attempts to regulate tenancy by law.
In the formerly socialistic countries, the usufruct right has become long-lasting and transferable. These two aspects have created a new land market for usufruct rights which have been priced and can be sold to other people. It is too early to assess the consequences of this new development.